LGIM buys Glasgow's Scottish court and tribunal building

By Paul Norman - Thursday, January 04, 2018 8:14

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LGIM Real Assets has bought Atlantic Quay 3, the central Glasgow Scottish court and tribunal building, from the Moorfield Group for £50m on behalf of its LPI (Limited Price Inflation) Income Property Fund bringing its investment portfolio to £1.1bn.

Atlantic Quay 3 is a 79,500 sq ft Grade A modern office building. It is fully let on a 25-year lease to the Scottish Courts and Tribunals Service and is based in the heart of Glasgow’s International Financial Services District.

The Atlantic Quay area has recently added some significant occupiers, including the Government Property Unit’s selection of Atlantic Square for a 300,000 sq ft regional hub.

Legal & General was represented by Savills and Addleshaw Goddard on this deal.

Derek Gilby, Senior Fund Manager at LGIM Real Assets, said: “We are delighted to have secured the Scottish Courts and Tribunals Service as a tenant, boosting the public sector covenants for the Fund on this excellent office investment, whilst providing an inflation linked income stream and taking the size of the Fund to well in excess of £1bn. The LPI Fund has consistently delivered its performance targets since its launch in 2010 and offers the high credit quality and longevity of income that risk-averse investors are seeking in this market.”

Tom Roberts, Head of Strategic Investment and Regeneration at LGIM Real Assets, added: “This area of Glasgow has witnessed significant regeneration in the last few years and as a result the Atlantic Quay area has become a strong focal point on the city’s commercial offering. This acquisition is a very compelling deal for the Fund, offering long-term growth and secure income prospects.”

MREFIII bought Atlantic Quay 1, 2 and 3, which comprise 280,000 sq ft of office space, in September 2015 for circa £60m, reflecting an initial yield of 8.5% for the three buildings. Moorfield is partnered with Resonance Capital to manage the three buildings.

Commenting on the disposal on behalf of MREFIII, Charles Ferguson Davie, Chief Investment Officer, Moorfield, said: “We identified the Atlantic Quay buildings as high quality offices at the heart of Glasgow’s International Financial Services District, in a prime riverside location and in an office market starved of new space. They were ready for refurbishment when we purchased them in September 2015 and we are proud to have developed such a successful scheme with Resonance Capital.

LPI Income Property Fund has reached £1.1bn of assets under management. Launched in 2010, the Fund offers defined Benefit pension schemes an innovative way to invest in direct property with secure, primarily government backed, inflation-linked sources of income, generating income yields well in excess of those from comparable asset classes such as index-linked gilts or social housing debt.

 

pnorman@costar.co.uk

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